China Fund News reporter Feng Yao
"After the start of the year, most polysilicon manufacturers are shipping at a loss," a medium-sized polysilicon manufacturer told reporters helplessly.
Since April, the price of photovoltaic silicon has continued to fall sharply. On April 17, the data released by the Silicon Industry Branch showed that the transaction price range of P-type dense material has reached 43,000-49,000 yuan/ton, and the average transaction price is 45,900 yuan/ton.
This price has also fallen by more than 20% compared with the average transaction price a month ago. At present, the latest market transaction price of polysilicon has already broken through the cost price of second-tier manufacturers, and has even approached the cost price of polysilicon leading players Tongwei Co., Ltd. and Daqo Energy.
More pessimisticly, it is difficult to see when polysilicon prices will bottom out.
The situation of demurrage will become more and more obvious
"The polysilicon sector is already facing a comprehensive loss, and the divergence between the upstream and downstream of the industrial chain on polysilicon prices is gradually increasing. The above-mentioned polysilicon manufacturer told reporters. In his view, the main reason is that polysilicon prices have recently experienced an "avalanche" at the bottom.
Since October last year, the transaction price of P-type dense material has been maintained at around 60,000 yuan/ton, which seems to show the characteristics of the bottom. But in April, this steady state was broken.
According to industry data disclosed by the Silicon Industry Branch on April 17, the transaction price range of P-type dense material was 43,000-49,000 yuan/ton, and the average transaction price was 45,900 yuan/ton, down 5.75% month-on-month. Compared with the average transaction price of 60,000 yuan/ton announced on March 20, the current price decline has reached 23.5%.
In addition, the transaction price range of N-type granular silicon was 47,000-49,000 yuan/ton, and the average transaction price was 47,500 yuan/ton, down 8.65% week-on-week. The transaction price range of N-type rod silicon was 50,000-54,000 yuan/ton, and the average transaction price was 52,500 yuan/ton, down 10.41% week-on-week.
According to the analysis of the demand side, the current decline in polysilicon prices is still lower than expected by the downstream side, coupled with the continuous decline in downstream production and the high inventory of products and raw materials, it is inferred that the possibility of wafer companies to start centralized procurement again is weak, and it is difficult for polysilicon demand to recover in the short term.
According to Infolink's tracking data, the inventory level of polysilicon suppliers has accumulated for more than 22 days as of early April, and the inventory size and proportion of different companies vary slightly.
Therefore, in the industry's view, polysilicon manufacturers will maintain high inventories for some time to come, and there is no hope that prices will be repaired before large-scale shutdowns occur.
It has already broken through the cost line of second-tier manufacturers
According to the Silicon Industry Branch, polysilicon prices are currently changing rapidly, and manufacturers are facing greater pressure to adjust prices. "Polysilicon prices have fallen below the production costs of enterprises, reaching the cash costs of some enterprises. The agency said.
As we all know, the leading manufacturers in the polysilicon sector with strong cost control are Tongwei Co., Ltd., GCL Technology, Daqo Energy, etc. So, where is the cost line for these top players?
Tongwei previously revealed to a reporter from China Fund News that the production cost of a single ton of polysilicon is less than 40,000 yuan. Daqo Energy revealed in its 2023 annual report that the company's cash cost per unit of polysilicon fell to 42.7 yuan/kg last year from 53.06 yuan/kg in 2022. In other words, Daqo's energy cost line is around 42,700 yuan/ton.
GCL Technology has also previously stated that the production cost of its Leshan GCL granular silicon project is about 35.68 yuan/kg (that is, 35,700 yuan/ton).
It is not difficult to see that the current transaction price of polysilicon is actually approaching the cost line of the above-mentioned top players. Although there is still room for premium premiums for leading players, new entrants are under pressure to face challenges such as polysilicon technical barriers, difficulty in climbing, and steep cost curves, as well as customer orders.
From the perspective of the industry, it is difficult to control the cost of new manufacturers to less than 50,000 yuan, and some new projects may face higher costs due to unsatisfactory production capacity or unstable quality in the early stage. "The cost price of second-tier enterprises is probably in the range of more than 50,000 yuan/ton and close to 60,000 yuan/ton. The aforementioned polysilicon manufacturers also support this view.
In other words, the current transaction price of polysilicon has already broken through the cost line of second-tier manufacturers and new entrants, and is also approaching the cost line of leading manufacturers.
In fact, the effect of the "avalanche" of polysilicon prices has been reflected in the profitability of leading manufacturers. Daqo Energy's 2023 annual report shows that last year's revenue was 16.329 billion yuan, down 47.22% year-on-year, and the net profit attributable to the parent company was 5.763 billion yuan, down 69.86% year-on-year.
The price reduction is almost "one-step" in nature
It is worth noting that the production capacity of the leading manufacturers is still being released.
Take Tongwei as an example, the company announced several expansions last year. Among them, on August 22 last year, the company announced a total investment of 20 billion yuan in Leshan, Sichuan, and the construction of two 16GW rod, slice and cell projects at the same time. Both projects aim to be completed and put into operation by the end of 2024.
On June 6 last year, Tongwei also announced the construction of a project with an annual output of 25GW of solar cells and 20GW of photovoltaic modules, with a total investment of about 10.5 billion yuan. Earlier, on February 7, 2023, it announced a new investment of about 6 billion yuan in Leshan City to build a high-purity crystalline silicon project with an annual output of 120,000 tons, which is planned to be put into operation in 2024.
Daqo Energy also mentioned in its annual report that the company's polysilicon production capacity will be further released in 2024, of which the new polysilicon capacity of 100,000 tons in Baotou Phase II in Inner Mongolia is expected to be put into operation in the second quarter. By then, its nominal production capacity will reach 305,000 tons.
"With the release of production capacity of existing manufacturers and new entrants, it is inevitable that prices will fall, but it is difficult to judge to what extent. Daqo Energy recently stated in an institutional survey.
Some institutions believe that due to the significant surplus and excessive inventory accumulation in the polysilicon sector, this round of polysilicon price reductions is almost "one-stop" in nature. Guojin Securities believes that the lack of competitive production capacity, enterprises will enter an endless state of blood loss, the disillusionment of profit hopes and continuous blood loss, will substantially accelerate the clearance of excess capacity.
Tongwei shares also previously told reporters that the phased oversupply has led to increasingly fierce competition in the industry, and some backward production capacity with insufficient technology level and relatively high cost will be eliminated.
Editor: Captain
Review: Muyu